It isn't going to get easier for Obama in the second year

There'll be no parade this time for President Barack Obama. No grand speech from the west front of the Capitol, no fireworks, no glittery balls to kick off the second year of his presidency on Wednesday, as there were for the first.

WASHINGTON — There'll be no parade this time for President Barack Obama. No grand speech from the west front of the Capitol, no fireworks, no glittery balls to kick off the second year of his presidency on Wednesday, as there were for the first.

Just a lot of hard work, an agenda full of unresolved problems and perhaps a more sober sense of just what's possible for the 48-year-old president, who's a little grayer now than he was a year ago.

He faces a country that's struggling to find its footing after a staggering recession, a nation that's starting to show signs of growth but is still losing jobs. He looks out at a world where he's made precious little progress, still trying to get Israelis and Palestinians to the peace table, and to get the North Koreans to give up their nuclear weapons and the Iranians to abandon their own nuclear program.

He'll tackle those and other challenges with far less political capital than he had a year ago. His approval rating has dropped sharply and is the second lowest in half a century for any president entering his second year, while his disapproval rating is the highest ever at this point in a presidency.

As a result, his fellow Democrats approach midterm congressional and statehouse elections this year nervous about being tied too closely to his agenda.

Obama may have to change his to-do list in his sophomore year. If he gets a health care bill in coming weeks, he'll pivot to jobs and the economy. Then a new budget, and changes in taxes.

Proposals such as the "cap and trade" plan to limit the emissions that cause global warming probably will have to wait. So, too, will overhauling immigration law.

"They have to rethink some things, recalibrate and refocus. They tried to do too much. And he's taken some hits as result," said Steve Schier, a political scientist at Carleton College in Minnesota.

He'll have to navigate not only through a wary Congress but also amid a backlash among many Americans against his agenda, notably his health care proposal.

"The conventional wisdom a year ago was that the tectonic plates had shifted, that Obama could win and anything was possible," said Michael Franc, the vice president of government relations at the Heritage Foundation, a conservative policy institute.

Yet polls show that, despite the 2008 election, Americans remain more moderate to conservative than liberal, and that creates a head wind against Obama's agenda for a more activist national government.

"Addressing that gap between where he wants to take the country and what the American people will tolerate is his biggest single challenge," Franc said. "I'm not sure how much of his agenda he can get."

Obama aides said the president has done well in a very difficult economy, and predicted that he'll do better as the economy rebounds.

"We are happy with what we've achieved, but we're not satisfied with what we've accomplished," senior Obama adviser David Axelrod said in an interview with several reporters, arguing that Obama succeeded in keeping the economy from sinking into a depression while also passing such laws as pay equity for women.

He acknowledged that Obama enters his second year with less political capital, but blamed that on the economy and insisted that both will come bouncing back.

"If the economy improves as I believe it will over the course of the year, that will redound to our benefit," he said.

In that environment, here's what to watch for on top issues in the coming year:

THE ECONOMY

With unemployment rising, Obama will be under growing pressure to find a way to create jobs, either through government programs or other means, such as a tax cut.

Axelrod said that Obama will seek tax cuts for small business to help them create jobs, press banks to make more loans to small businesses, support new spending to hire people to work on infrastructure projects and find more money for renewable energy to create jobs.

"The dominant priority for the next year and beyond has to be job creation, family income and income security, and growth," added Obama economic adviser Larry Summers.

HEALTH CARE

Obama is pressing for a compromise between the House of Representatives and the Senate that would expand health coverage to many of the nation's uninsured, require most people to buy a minimum amount of insurance, offer help to those who can't afford coverage and prohibit insurance companies from denying coverage or charging people more because of pre-existing conditions.

If Democrats retain the Massachusetts U.S. Senate seat once held by the late Edward Kennedy in Tuesday's special election — and thus the 60 seats needed to get a final plan through the Senate — it's very likely that the president will sign a historic health care plan into law.

TAXES

At the end of the year, all the 2001 tax cuts that former President George W. Bush signed into law will expire, including cuts in income tax rates, capital gains and dividends, and an expansion of the child tax credit.

Obama's expected to propose extending the tax cuts for all those who make less than $250,000 a year. He'd let those tax cuts expire for — and thus increase taxes on — those who earn more than that, however. Chances are very good that Congress would pass such a tax plan and the president would sign it.

IMMIGRATION

Obama wants to strengthen border controls and enact a plan to allow an estimated 12 million illegal immigrants a path to citizenship by paying a fine, learning English and going to the back of the citizenship waiting line.

The Congressional Hispanic Caucus also wants to overhaul immigration. However, House Speaker Nancy Pelosi, D-Calif., has told House Democrats that she won't make politically vulnerable members vote on such a controversial proposal in an election year unless the Senate votes. That's unlikely.

ENVIRONMENT

The House has passed a so-called "cap and trade" bill that would limit the emissions linked to climate change. The Senate hasn't, however, and is unlikely to approve one this year.

AFGHANISTAN AND PAKISTAN

This will be the second year that Obama escalates the war in Afghanistan, sending 30,000 to 35,000 more U.S. troops to join the 70,000 who are there already. There were 31,000 there the month before he took office.

As he works to stabilize the Afghan government and fight al Qaida there, he also must press against al Qaida terrorists and their allies in Pakistan.

U.S. policy calls for working with the Pakistani government rather than invading its territory, but Pakistan hasn't been as aggressive as the U.S. would like, and American drone strikes on terrorist targets there have raised tensions.

IRAQ

This is the year that most U.S. troops are to withdraw from Iraq. Tensions between Sunni and Shiite Muslims and between Sunni Arabs and Sunni Kurds there remain high, though, and the political and humanitarian effects of the resulting security vacuum are of great concern to the region and to Obama.

MIDDLE EAST

Obama dispatched his national security adviser, retired Marine Gen. Jim Jones, to the Mideast this week in a new bid to get the Israelis and Palestinians to the peace table.

It's unclear whether anything has changed, though, whether even modest progress is possible and what new leverage the U.S. could exert.

IRAN

With the failure of his effort to talk Iran into dropping its nuclear ambitions, Obama must decide this year whether and how to move on tougher sanctions.

Congress is poised to act, but the administration and other U.N. Security Council members have a calculation to make: whether intervening now, when civil unrest is directed at the Iranian regime, would be counterproductive.

TERRORISM

After missing his one-year deadline to close the prison at Guantanamo Bay, Cuba, Obama still faces plenty of challenges to getting it done.

He'll encounter congressional resistance as he seeks to prepare an Illinois state maximum-security prison as the new home for Guantanamo detainees who are facing military commissions or indefinite detention. He'll face domestic pressures from all sides over everything from limiting civil liberties to protecting the homeland from further attacks.

The attempted Christmas Day airplane bombing further complicates the closing because of questions about detainees that were to be returned to Yemen, where the bombing suspect allegedly was trained.